social media. it's friday, december 7th, that's right, the day that will live in infamy, 2012, "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and steve liesman. the november jobs report is now just about 150 minutes away. count do countdown is on. the economy probably added about 80,000 jobs last month. reuters consensus is a little higher at 93,000. the unemployment rate expected to hold steady at 7.9% and economists say the slow down in nonfarm payrolls will reflect the effect of sandy. joining us this hour is bank of america merrill lynch global

research senior research economist michelle mire and we'll talk through everything that's been happening through jobs and what to expect. but first, there is a developing story. an earthquake off the northeast coast of japan triggered a tsunami warning. the warning has been lifted, but it was a 7.3 quake. so far no reports of any injuries or damage. it was for the same area devastated by an earthquake and tsunami back in march of last year. we will continue to bring you any developments. in the meantime, steve has some of the morning's top other stories. >> let's start with the markets. asian stocks rallying to 2012 highs overnight. the nikkei edging lower after hitting a se hitting hitting a seven month closing

high yesterday. european trading, shares seem to be fwllat. bundesbank announced it had cut its growth outlook for the country. in the u.s., the nasdaq snapped its losing streak yesterday with its first gain in five days. the dow was on pace for its third straight weekly gain. u.s. equity futures at this hour -- we don't have them. maybe joe has them. >> steve, you are here because it's jobs friday. are you here representing c innocent objects t cnbc or the bls? >> i'm representing myself actually. >> good to have you. in corporate news, netflix, regulators warning they may bring civil action against the company and its ceo for violating public disclosure

rules with a facebook post. reed hastings posted netflix monthly viewing exceeded 1 million hours ever. they're required to make full and fair public disclosure of material nonpublic information and hastings i guess thought it was okay and it's a gray area. isn't that full and fair? >> i think it is a gray area because we've always made the argument if you're watching cnbc it's okay because this is a public disclosure, right? i guess facebook maybe it's different because you have to be a friend to be able to get access to that information. if it was twitter, maybe a different story. i wonder if that's how deeply they're digging into this. >> he doesn't think there's anything. he dismisses the contention saying he doesn't believe the facebook post was even material

information. it wouldn't take a lot of -- you'd have to do the math to figure out what that says about the results for the quarter. in a letter yesterday he suggested that the post was accessible to more than 244,000 stub describe subscribers. >> maybe he has a public page. >> let's say you talk to a reporter who represented a paper with 25,000. >> but this is much more. >> this is ten times that. he would have satisfied his -- seems to be one of the dumber things that's out there. kind of a chilling thing from the sec. a chilling effect. >> we'll see what the share disafter the bell yesterday. knoll not whole lot happening. >> this is stupid. >> can't have everybody working on steve cohen, can they? why are you laughing at that?

and a judge naming lead plaintiffs in litigation dealing with the ipo of facebook. a group of investors including state pension funds will assume the role in a proposed class ax case. being a judge also named lead plaintiffs for a lawsuit against nasdaq, that exchange also being sued over allegations that orders to buy and sell facebook were not properly executed on that first day of trading. and speaking of text lawsuits, yesterday apple tried to convince a u.s. district judge to ban sales of sam sisung. a ruling will come at a later date. in august a jury found samsung had copied critical features of the iphone and ipad and awarded apple damages. >> speaking of apple, apple is arguably the stock of the week. shares rebounded yesterday after

a rough session on wednesday. today's heard on the street column says that the stock's 22% drop creates an opportunity for investors. the reason they're citing is that apple is more of a software company than a hard one, and that means that profits are likely to remain stable for some time to company. meantime everyone is still talking about tim cook's comments in an interview with brian william, he says his company plans to produce one of its exciting lines of mak executers in the united states next year. >> there are skills that have left the u.s. not necessarily education, but stopped producing that. >> how do we get that back is this. >> it's a converted effort to get them back. and with this project that i've talked about are we do a mac in

the united states next year, i think this is another good step for us. >> software sales declining by 11% from last year, still better than 13% drop analysts had been expecting. hardware sales were down 13% while accessories dropped by 8%. >> and the john mcafee saga continues to unfold. the software guru is now back in a detention center in guatemala. he was taken to a hospital yesterday for what his lawyer described as two mild heart attacks. mcafee's attorney says his client suffers from anxiety and hypertension. the software pay near is being held by guatemalan authorities for entering the country illegally from belize. he fled belize after authority wanted to question him about the death of one of his neighbors. mcafee said the police were behind all of this, he's been set up in all of this, but he's also -- >> tattoo on his arm.

>> he's also publicly blogged about using -- >> i want to convene our kids investment committee. your daughter has a smartphone, right? >> oh, yeah. >> what kind? >> iphone. >> my son has a samsung. i asked him if he cared about getting an iphone. he got a droid. he doesn't care. he's cool with the droid. and our data from the all america survey showed that in tablets, iphone -- ipad leads samsung, except in the 18 to 34 demographic. where the aspirations are equal. so i just -- >> part of the interview brian did, they show that add where the parents are -- the young guy holding the line for his parents. they get an iphone and he's already got the -- they try make it hipper to have a samsung, right? they're trying to do that. and both my kids have -- it's nonstop. i don't think they ever put them

down. >> your youngest is how old? >> ten. >> we had a rule in our town among all the parents no cell phone until fifth grade. all the parents got together and agreed. because it if one kid got it, we all -- about a dozen pafrpts in t parents in the same community. >> we've held off. >> it's an internet access device for him. >> it was just a matter of stopping the tech envy going on in town. in washington news, both parties hinting at renewed talks on the fiscal cliff. the acknowledgement of open lines of communication passed for encouraging news. a new survey finds more than 60% of leading investment professionals predict a shorp stock decline in the market if the government fails to come up with a deal. in this case defined as a more than 10% drop in the dow. 56% surveyed foresee a deal to

avoid the cliff by year end, 44% predict failure in the ongoing negotiations. as for corporate america, through yesterday's close, there have been # 70 announcements of special dividends. these special difference deebds are valueded a more than $30.1 billion. among the latest names, mcgraw hill will pay a special dividends of $2.50 a share before year end. and drop its previously announced plan to buy back up to $200 million more of stock this year. >> everybody's paid their dividends this year, so they won't be paying them next year. >> this is a major issue. what's going to happen is -- we have two great economists onset. but that money will get annualized, so the 30 in the gdp accounts is 120. they'll multiply it by four on

the dividends income. it's quarter to quarter change at an annualized rate. so it's times four. there is the marginal propensity of those people to get to consume it. >> let's ask them now. >> that's why everything -- >> that i say is nuts. >> you can almost get any kifrnd info you want. >> and when we talk about the jobs report, seasonaled justments will be a huge factor relative to sandy. >> bob and michelle are here. and my biggest question, if all the companies are pulling the give dends forward, the u.s. government thinks it will be taking in x amount based on what they would normally get for dividends plus whatever the hirer rate is going to be. it will drop substantially, correct? >> you'll get leads and lags in the revenues. a lead into this year, a lag next year.

pretty obvious how this works. in terms of tax planning, let hope they know to take account of this. the argument will argue how great this is working and when there's a shortfall, how did that happen. so i hope we don't go that route. but this administration has been very big on these kinds of things, basically distorting what's going on and this current thing about the mandate really bothers me. so i woouldn't -- >> i think the challenge is being forward looking. there's big challenges not just because the challenge in terms of getting all the information, but also if win terms of trying make the budget numbers look good and you never really want to take that hit. so you want to pull forward as much --

>> and i don't know how many assumptions you can make, but when and you have tax policy that changes every six months or a year and you don't know what's coming, obviously the lead story in the "wall street journal" is about charitable giving and in some cases people are even paying their mortgage in advance. >> some people think that money is better left in the private sector. i don't know. companies seem to think that, charities seem -- just seems like a better place to leave it. people are very resistant to giving money to people that they think will waste it. >> that's the same problem with all of this, we have a housing sector that's just now starting to have a real recovery going and now they're talking about taking away the mortgage interest deduction. does this make any sense to anybody? the housing recovery is fragile. looking better than it was. but it's still fragile. did you really want to -- >> it's almost a regressive -- it hurts the people that you're

trying to help. you have to do it some time. >> the amt takes that away, right? if you're a wealthier person and if you have excessive deduction, whatever they are, it just at some point takes them away and throws them away. >> but i wouldn't argue that the current tax code is a good thing. i think if you can zero it out and start from scratch, that would be a much better -- >> and by wealth you mean if you make like $70,000 a year. >> there is no simple answer how to obviously solve the tax problem, so ultimately you have to simplify the tax code which is what they're trying to do by changes in deduction. you but i agree, i don't think it makes sense to change the mortgage tax deduction. >> but you could make a decision that you were going to grandfather it out over the next five to ten years, 12 years. i think that's what they did this britain. you have to make the decision that this is something we will no longer pay for in the future. >> and if people are forward looking, they could potentially

plan. >> for the first year, a higher dividend collection rate may already be offset by everybody moving forward. and in the last couple of week, the great fact in britain where they went to 50% on millionaires and they ended up getting half as much revenue. >> i've been thinking about this and i can't figure it out the macro effects of this dividend boom that we're going through right now. first thing i figured out i think is that this is not advantageous to more than half of all rs. if you figure out that half of all shareholders are tax exempted and they don't really care, that's one. the second is not all shareholders had a plan you would assume to sell that stock and get that dividend. they may have been long term investors, so they don't benefit, they don't really care. >> and the other thing is when it comes to capital gains,

right, so they don't care when you think about the problem of -- you've distributed the money to me. what do i do with it, how do i invest it in a beneficial way. to i spend it, do i reinvest it. is the idea that i then take this money, that the stock market adjusts lower because of the dividend payouts, and i reinvest it at a lower rate, is that how it's beneficial when you think through the flow of money that will result from this? >> i'd rather have nowhere to put it than not having it and having the government have it. >> it's a serious investment quandary. >> insiders are the ones we're worried about here. >> that's what i'm talking about. is this something done by insiders for insiders? we know it doesn't help half of the folks.

>> because of the tax deferred stuff. >> what happens to the money? >> what always happens to money. we have an environment where the interest rates are low, so if you reinvest it in a fixed income product, you won't make much return. you'll have capital losses on bonds. i'm very concerned about the low interest rate in the bond market and the long period of time we've had bond yield this is low. and in the stock market, you have to be careful because there could be a sorting out among stocks between high and low dividend stocks and how they perform when these guys go x dividend. >> why couldn't you invest in g chlt and g e or comcast and get a 3% yield there. either one would be a good place.or comcast and get a 3% y there. either one would be a good place. >> wasn't i invested in company x before, didn't i have that money in there and now they're giving it back? >> now you own a larger part of the company. >> no, because -- >> if you reinvest it and they buy more share, you own a larger piece of it. >> it should be equal. they've taken that cash out of the company. the stock price should adjust

lower. >> but cash is not the same as the ownership portion. your thought would be if you can buy more of the company, you get a larger share. >> you're getting bogged down in minutia here. i'm worried about you again. you know who else you're bogging down is this all of our viewers at home are now tired. >> it's exactly the problem they're going to have. >> viewers are going -- >> they'll get this special dividend and the issue becomes what to do with it. >> i think also what you're potentially getting at is the idea of a financial wealth effect. we always talk about how household balance sheets matter a lot for consumer spending. most of the time we focus on housing assets because it's more of a permanent change this wealth, so consumers tend to spend out of that, but is there a financial wealth effect and will that start to show up in consumer spending. that's where i think people are a lot more mixed because you often think the changes in financial wealth are more temporary, so you're not as

inclined to spend out of it. >> but you're not running yahoo! are you. who is that? you're michelle mayer. >> yeah, that's marissa. she has blond hair. >> how do you think it's going at yahoo!? never mind. michelle mayer. all right. >> coming up, jobs report expectations, plus morgan stanley's new pay plan. but first, the national christmas tree is now aglow are red, green and white twinkling lights. >> its they call it a holiday tree. >> last night the flipped the switch on the giant blue splus. the star-studded event entertained the crowd -- were through? >> i was in d.c.? no. >> that one has nothing on 30 rockefeller.

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managed to close higher yesterday, but today we'll give back less than 0.2%. making headline, morgan stanley unveiling a new pay plan. the firm's financial advisers, ploer, being ensivent advised t increase client loans and transfer accounts with less than $100,000 in assets to a client advisory center.transfer accounn $100,000 in assets to a client advisory center.and transfer ac than $100,000 in assets to a client advisory center.transfern

$100,000 in assets to a client advisory center.increase client transfer accounts with less than $100,000 in assets to a client advisory center.transfer accounn $100,000 in assets to a client advisory center.increase client transfer accounts with less than $100,000 in assets to a client advisory center. >> we've been working only for the last couple of years to build outbanking and lending business. as we get more of our financial advisers to use our lending products, we have significant growth there. >> my mind just jumps around. yeah, just suddenly fred -- no becky will read a story in a second. greg fleming has been working on building up the unit's lending business to increase its return on equity. now to today's weather forecast according to steve liesman. >> is that me? >> i wanted to get right to it. stitching. she would jump on things when one person stopped. that way the people at home never get a chance to even -- they can't blink. >> no dead air. >> you can't go to mika and joe. now to today's national forecast, reynold wolf joins us

from the weather channel and it looks like a rainy saturday for us here in new york. >> it does. you know, parts of the southeast could definitely use the rainfall, but you're guys are hogging it. but temperatures will remain fairly mild at least through much of your weekend. here is the story for you as you mentioned, rain in the northeast, mostly cloudy, spotty showers parts of the southeast coast. nation's midsection, some snow showers in the twin city, dallas looking beautiful with 72 degrees. out west, looks like all of the moisture will be limited to parts of the made civic northwest. high mountain, cascades. snow could be over a foot 7,000 feet and up. ski country, fantastic. so that's certainly the good news in that part of the world. in term of your air travel, backups are possible in chicago. rain is the issue. low clouds, too, limiting visibility. but minneapolis, new york, miami, miami is misspelled. i'll stand in front of that. miami and seattle, you can see just minor delays there. let's send it back to you.

>> good job, reynolds blocking maimi. >> if you could talk to someone about snow in the rocky, would you? >> are you going up? >> eventually. >> steamboat springs will see over a foot of snow between now and sunday. >> that's good start. but we didn't know anything about january or february? >> not yet. >> if you get a chance to hit those maps to move stuff over the rocky, if you could. >> we'll do what we can. >> in squawk sports new, are the broncos made their eighth straight victory look easy last night. peyton manning threw for 310 yards and had his 30th touchdown pass of the season on games opening drive. the broncos handing oakland its sixth straight loss, 26-13. and in college shorts news, the awards last night, national quarterback award went to johnny

manziel. the first freshman to win this award. johnny football. >> 500 more yards than cam newton, i think. >> the jim thorp award went to jonathan banks of mississippi state. nation's top receiver, marcus lee of usc.winner of the hoe depot coach of the year is notre dame's brian kelly. kelly and his fighting irish will meet the crimson tide in the bcs national championship game. the maxwell award is given to the nation's best all-around player and the nominees for this trophy are the same three vying for the heisman trophy this weekend. manti te'o is the first defensive winner since 1980. heisman is handed out saturday night in new york city. in the running, collin klein, johnny ma johnny manziel and manti te'o. >> coming up, it's jobs friday.

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somebody called popo, 5150 is the police kacode it crazy person is on the loose. in this case he's crazy about a woman, although that can be bad. believe me. like i am about penelope. crazy. popo means police. good morning. welcome back to "squawk box." i'm joe kernen along with becky quick and steve liesman. today's top story, the november jobs report. the dow jones news wire's poll of forecasters finds that the economy likely added 80,000 jobs last month. it's worth noting that the reuters consensus a little higher, 93,000. unemployment rate expected to hold steady at 7.9, but liesman says it's possible we could have an 8 again. economists say the slowdown will

reflect the effect of sandy about which we'll ask zandi. joining us this hour to talk the economy, michelle mayer and bob bruska. a great morning to have both onset. first a developing story, a strong earthquake centered off the coast of northeastern japan. triggered a tsunami warning from officials. although that warning has been lifted. so that's good. we hope there wasn't a lot of damage. this could either be an actual earthquake or one just shaking the camera. the 7.3 earthquake shook buildings as far away from -- i'm not convinced. i'm almost sure i could do that. so far no reports of any injuries or damage. the tsunami warning is for the same area devastated by an earthquake and tsunami back in

march of last year. we'll continue to follow this story and bring you developments as they happen. all that uncertainty surrounding the fiscal cliff is leading to a boom in charitable giving. taxpayer and charities are trying to maximize donations before end of the year. reason of course is for the tax deduction that's given for charitable giving. it's coming under pressure as part of a broader fiscal cliff deal. there's an article on the front page of today's "wall street journal" that highlights other ways people are trying to take advantage of the certainty over the final few weeks of 2012. some of the examples they cite are people said to be accelerating large medical expenses for this year and selling appreciated stock in some cases even prepaying their mortgages so they can make sure they get the mortgage interest deduction. and, bob, you think -- for a lot of people that won't matter? >> you have the amt. so if you take excessive deductions, they just disappear. which is one of the things about all of this about limiting these deductions which is kind of silly because the amt does it in

the aggregate. and of course the amt is grabbing more and more people and it's one of the things they want to reform, but if they reform it, they have to raise taxes someplace else. so it's confusing. >> but that's the worst part of it, a simpler tax code that someone could actually understand and now how things work that allows less room for loophole so is that people who have accountants who can find all these loopholes for them -- a simpler tax code is what they have to come up with. >> sounds like a good idea as long as it's a sensible tax code. when you hear people talk about simple tax codes and then they start having their exceptions and everybody wants to tweak it, we have two parties with agendas. and it's in the simplicity. >> a lot of lobbyists looking for ways to -- >> and a lot of tax accountants who abhor simplicity the way nature abhors the vacuum. starting next year, annual contributions at ibm will be

made on december 31st and nonretirees who leave did have december 15th don't get a penny. the wall stre"wall street journ reports the new system could save the company millions of dollars each year. the story is notable because ibm has been considered a fleerd paying benefits. so the decision could ripple through corporate america and change the way other big companies make their contributions. >> ibm has always been incredibly generous, too. somewhere between 6% and 10% of your annual salary into the 401(k) every year. so a big deal for people who are leaving the company and, b, you worry about the idea of putting in gradually over the course of the year, so you get -- it smooths out if there are bumps in the stock market along the way. >> do people leave december 15th as opposed to december 31st? >> no. >> just wondering if there's something that goes on there that they're taking advantage of some idea that people leave before christmas or -- >> it's a very generous program. they do pay in 6% to 10%.

joining us from the futures pits, ira harris. we're looking for this jobs report that comes out later today. expectations are relatively low. is the expectation that if it beats those numbers, you would see a pop in the stock market? >> i think it would have to be the original when you take out the effects of sandy, they were looking for 145,000 to 150,000. if you happen to get that, i think the equity markets would view that as a positive. in this light, we also get the canadian number at the same time, 8:30 eastern time. and they used to be earlier, but that becomes significant because so many automobile manufacturing takes place in ontario and with the robust numbers that we've seen out of auto sector that we saw earlier this week, it will be interesting to see if manufacturing jobs in canada show themselves. so i'm actually looking up there as a better indication. because by the time we talk out

sandy from in number, it will be meaningless anyway. so i'm going to look at the manufacturing sector out of canada as probably a better indication of what the u.s. job numbers ought to be. >> how long will sandy mess up the numbers? is this a year that we have as to worry about the numbers. >> >> two to three months is what i read. >> i think that's probably read. if you look at katrina, it hit the end of august 2005. september and october were artificially low. and then you got a pop higher in the third month aunt then you returned to some sort of normal trend. so if it follows the same path, you'll get about three months. >> i'm no longer confuse aed about the dividends thing, but i am confused about something else. >> couldn't the sandy weakness then be followed by fiscal cliff worry weakness. even if we don't go over the cliff. we could go above 8% and all of

a sudden -- >> we could. and i'm expecting over 8% today or around 8% or more. and just to explain, there's a couple things going on. it's an earlier thanksgiving. so as i understand it, the bls moved survey week backwards to 11/5 from 111/12. that means it further back into the teeth of sandy's effects. all the peek out ople out of wo couldn't find work if they were looking for it. however the earlier thanksgiving also means retailers hire earlier. so you have these two forces. and zandi said there was two things, plus 86 from sandy, minus 60 or 70 because you have a seasonal effect of earlier retailers. on the jobs number. on the jobs number. so these offset? hiring for retail means a

positive. less hiring for -- because of sandy is a negative. could they offset? >> there has to be some netting. there are special effects in the reports you're trying to sort out. and there's also the question of what the the economy is really doing. and one of the other problems is that data had been revised up and people had been increasing i think thinking the economy is doing better, but it seems really the actual -- because revisions, it's like expectations have been moving up, but the data themselves seem to me to be getting weaker. so i'm concerned that the economy actually is weakening coming into this period. >> ism services was better than expected. manufacturing was down. >> employment component is worse than this only 36% of the time. >> production was up. >> very surprising strong report especially because in the third quarter, consumer spending on services up, but only 0.3% at an annual rate. so what the heck is going on in

the services sector. if people aren't buying anything -- quite a shift. >> adm showed a lot of hire. plus 141 or something like in a. >> i understand why you are turning your eyes north and looking to numbers from somebody else. thank you for joining us this morning and have a great weekend. >> a pleasure. thanks. coming up, the cnbc challenge, rise above. congressman peter roscom, we'll see if he's ready to accept the call it action.

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welcome back. you can see the dow futures are down by about 23 points. s&p down by 2.25 points. in our headlines, head of irs warns if congress fails to reset the alternative minimum tax, there could be a delayed start to 2013 tax season. in programming its systems, the irs considered the congress would patch the amt. without another patch, the amt could hit as many as 33 million people for the 2012 tax year and it will take them some time to reset all of those forms. and squawk is in session thorn with congressman peter roskam, member of the ways and means committee. thanks for joining us. >> good to be here. >> one of your quotes is that house republicans are prepared to get the yes, but not prepared to get to foolish. and 1.6 you would think is foolish. 800 people think maybe that's doable. could it just look like this, i'll cut to the chase, we go up -- we start at 500,000 and

above. we go up 2 percentage points to 37 and do a couple things on deductions that are politically possible to do to get to a trillion dollars. if the president were to come down to a trillion, could we go up -- would republicans go up to a trillion in that. >> i'll give you a straight hans, but inhan answer, but in a minute. let me get to the big concern. the entire conversation since the election has been litigating gone squaquarter of the preside own architecture. all we're talking about is revenue, revenues, revenues. the white house has been absolutely silent on 75% of their own described remedy and that is where are the cuts. now, secretary geithner comes to capitol hill and with a straight face says we need to spend more money. we need more stimulus spending. look, i come from the state of illinois which is an example of what not to do. the state had the same underlying problems, that is

runaway spending problems, and they came up with the wrong solution. raise taxes, don't deal with the underlying problem, chase an entrepreneurial class out. $7 billion in unpaid bills and higher average unemployment rate. it is a system for failure. so what's happening with my neighbors in illinois, and these are the people that are minkd their own business, not paying attention to all this stuff, all of a sudden they're looking up and saying why is it more expensive for my child to go to the university of illinois than it is to go to indiana university. why can't my kid get into a state school. all of these things which is the ripple effect of, what, bad policy. and it is denial behavior. and i think the president's problem right now, he's overselling. he's overselling the revenue side and he's creating the impression that, hey, you pay a little bit more taxes, and i

mean you pay a little bit more taxes, and all of a sudden the stars are going to be brighter. >> change what you can, don't change what you -- at least accept the things that you're unable to change. you can't training i don't think the president on what you just describes. what can republicans do to get to an agreement where we -- or steve did an enter swru ghitner the other day. and i don't know whether he slipped or whether it was intentional, i don't know whether they want to go over the cliff, but they're ready to go over the qulif. >> so they're poised for operation geronimo. we want to owe voter i-owvert i. the best indicator of future

behavior is past behavior. president obama twice before has made declarative statements about what he's not willing to do. and frankly, all we've heard from the white house is what they're not willing to do. so the president has signed the it tension of these rates in the past. i think the underreported story in all of this drama are senate democrats that are wringing their hands and avoiding eye contact. >> mcconnell would have produce the brought it up not just as an amendment. >> we're too busy today, forget it. >> they can't pass it in their own house. >> so here is the question. the operative question is does this administration really want to take to us $22 trillion? is that really where they want to go? because that's the pathway. and if they do, aren't we better to deal with this right now? this doesn't get any better the longer we wait.

when you have the speaker saying we're willing to move, our movement is to put revenue on the table -- >> are you saying a bucket of crazy is better than the long term implications? >> that's what the country is dealing with. neither are things you want to embrace because they're both miserable. but based on experience in illino illinois, illinois is in a very bad state. >> the president comes from that state, too. >> so that suggests further that is his world view. what has the city of chicago be doing? >> rahm emanuel took on the teacher's union. >> he got rolled. and they've been selling assets. it's been asset sales, parking contract, not dealing with the underlying spending problems. so house republicans are determined to deal with this debt question.

so when boehner comes out and gives his talk right after the election -- >> but honestly, the administration has criticized the republicans because there are no specifics in the spending cuts. >> come on, look. the erskine bowles language -- you know how this works. house republicans are will -- >> give me one. >> i won't play that game and here's why. house republicans -- house republicans are willing to sit . house republicans are willing to sit down. they're not any more anxious to deal with the cuts and pass the cuts than anybody else is but we demonstrated through the ryan budget, we did it once, we did it twice -- >> i'll give you that point. i wish everybody would stop talking about this in public and get behind closed doors and actually make this happen. i can't believe the amount of tough that is talking, the tough talk, we'll go over the cliff, we'll go over the cliff. >> let me ask you a point. it's a fiscal speed bump a $600

billion tax we need. the real thing we're headed for is the long-term progress we have to make. i'm very concerned the atmosphere is very poisoned the $600 billion problem when we have a multitrillion dollar problem where you want your energy placed. people are folding in longer-term fixes, right, that you can't agree with. you're never going to agree on the end of the year for them. why don't you put it off until next year and solve all of it in the context of a real multitrillion dollar renegotiation on what the long-term fiscal situation looks like? doesn't that make a lot more sense? >> you would have to elect romney to do that. you're not going to extend the bush tax cuts for the high end. >> for another minute. >> not even for a milliseconmil. >> the republicans want to bargain away and let taxes go up by the end of the year and have the big negotiations occur next

year when the president will want even more increases in taxes. >> let me ask a different question and it's sort of the -- >> and then we got to go. >> here's the opportunity for the president to eclipse the whole thing, i don't think he's going to but he could eclipse the whole scene. let's not relitigate '01 and '03 let's bridge to tax reform and move forward. the senate democrats not answering their phones are the ones to ask about this one. >> congressman, thank you for being on. the final countdown to the jobs report. stick around. ♪

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all right. we are wrapping up our first hour of "squawk" this morning and we want to thank our guest hosts this hour. thank you very much for spending the hour with us. it's been a pleasure having you both here. >> thank you. >> okay. >> do we have to go immediately? >> we do. >> all right. we'll take a quick break right now. we'll have more of the morning's top stories when "squawk box" comes right back. plus, what do the nba, mortgages and the motor city have in common? today's guest host quicken loans chairman and cleveland cabs owner dan gilbert, the economy, investing and the fiscal cliff when "squawk box" returns. if you think running a restaurant is hard, try running four. fortunately we've got ink.

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getting america back to work. our guest host is doing his part, spending millions to jump-start the motor city. dan gilbert is the founder of quicken loans and blackrock ventures. he tell us about the opportunity detroit. netflix in the news. >> what you are about to see is channel 4 news. >> now the s.e.c. is showing interest in ceo reed hastings. we check out the good, the bad, and the ugly. it's jobs friday. "squawk box" begins right now.

♪ good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and steve liesman who is in for andrew ross sork been. the futures are weaker this morning. the dow futures only down 15 points right now so they've shown some improvement. s&p futures down 1 1/2 points. investors focused on the november jobs report which is out 90 minutes from now. the dow jones forecast is calling for 80,000 new nonfarm jobs for november with the unemployment rate remaining at 7.9%. reuters is expecting 93,000 jobs. there's no deal to resolve the fiscal cliff but there are indications of inside-the-scenes talk. the white house told reporters that lines of communication remain open not sure exactly what that means but a spokesman for house speaker john boehner used a similar phrase.

maybe that means call me? i don't know. analysts say there are some suggestions that there's real progress that can be made. a 7.3 magnitude earthquake hit the northeastern coast of japan this morning, the same area as the devastating march 2011 quake. but there was a tsunami warning canceled and reports of injuries or damage even though the quake shook buildings. workers at the fukushima nuclear plant were ordered to higher ground as a precaution. our guest host is dan gilbert, he's chairman and founder of quicken loans and the owners of the nba's cleveland cavaliers and among the topics we're ready to talk about dan, the risk of the looming fiscal cliff and the broader economy. we'll start with this morning's other top stories. dan, welcome, great to have you here. >> great to be here. >> we want to find out about a lot of things including the housing market, because i know you have a really good feel for it. >> there's a lot to talk about that's for sure. >> the cliff and some of the stuff happening in michigan as

well. netflix received a notice from the s.e.c. regulators warning that they may bring civil action against the company and reed hastings for violating public disclosure rules by posting something on facebook. back on july 3rd the ceo posted and here's the quote netflix monthly viewing exceeded 1 billion hours for the first time ever in june which seems -- he thought that was fairly innocuous, but the s.e.c. says it violates regulation fd which is the public disclosure. you have to make full and fair public disclosure of what would be considered material nonpublic information. and hastings says this is crap. he's dismissing the s.e.c. contention saying he did not believe that the post was material on facebook. in a letter yesterday he also suggested that because the post was accessible to more than 244,000 subscribers to the page, it was very public. shares of netflix not much happened. there are other things happening

with the company, too. we'll talk with an analyst who covers netflix in about 11 1/2 minutes. this is kind of a crazy story, i found out it's a public page so it's once you don't have to be friends to get on to it. anybody can look at it. you hear a situation like this the s.e.c. breathing down his neck on this. would it occur to you that was something? >> i'm glad we're not a public company because if my twitter account ever got -- big trouble. you know, he's just posting sort of what you said an innocuous statement and the whole world can get to it, i don't know what the issue is. >> it wasn't on the prompter. i threw that on. do you think? i might be violating public disclosure -- >> an oxymoron just a sense, right? for posting on facebook, for not publicly disclosing something that he posted on facebook. sounds like it contradicts itself in the very sentence, right? >> that he publicly disclosed. >> on facebook. >> that's right. >> maybe he had to be on twitter

also? i wonder, wouldn't you like the people involved at the s.e.c. just like the four or five, maybe they're, you know, 26 years old or something? who are they the people that decide? i'd like to ask them. >> i think becky said this the last hour, you hope they have better things to do. and i think we established earlier if regfd fulfillment is telling a reporter who could have 25,000 readers -- he has 220,000 potentially. >> and 243. >> and it's public how could this be anything other than a public disclosure and it's immaterial, right? >> we talked about how if you talk to a newspaper that had 25,000 readers that would be considered published. >> that would be considered fulfillment of the reg fd public announcement. >> is it overstating to say the s.e.c. should rise above in this case? >> i think it's clearly not. >> let me get my pen. could a corporate bond bust be coming?

top-rated companies are on pace for a record year of debt raisings in the united states with deals already topping $1 trillion in value but "the wall street journal" reports some of the biggest fund managers are warning dangers are lurking in what were once seen as the safest investments, interest rates are low and bond prices are high and some managers say there is little room left for gains and a small interest rate gain can eat away at bond cautious. u.s. companies have been stockpiling cash but numbers from the fed yesterday showed some of the firms slowed their savings as the economy has emerged from recession. companies may no longer be adding to their cash reserves but they aren't growing the balance either offsetting business uncertainty. some companies as we discussed issuing special dividends trying to beat possible tax hikes and the fiscal cliff uncertainty could lead to an increase in mergers and acquisitions. they look to complete transactions by year end and i made a fool of myself the last

hour trying to go all the way through. not doing it anymore. >> we do that all the time here. that's what we have three hours for. >> it was dumb. >> the name fiscal cliff where did that actually come from? >> i don't know. >> bernanke maybe. >> maybe. >> really? >> maybe bernanke. >> that thing really stuck. >> that's a good question. that's good trivia. i'll goog it. >> we've said it's not really. it doesn't happen really. it's more of a ski slope it's not a black diamond slope. it's more advanthan advanced. >> a double blue. >> but not without a lot of moguls. >> dan gilbert is the own of the cleveland cavaliers and the founder of quicken loans and you're the perfect person to have here because you have your finger on so many different things happening in detroit and around the country. let's start with the housing industry this morning because people have been trying to figure out if the resurgence there is for real. you see so many people who are coming in either for mortgages or refinancing.

what do you see happening? >> well, you know, real estate is local as we all know. it's a market-by-market thing and when you put a national number to it you're taking an average that is sort of meaningless if you put it that way. some markets are doing well and most of them are still fairly flat. i think we got a little bit of a bump. i wouldn't by any means call it a major recovery yet. but we're seeing areas in the west, we're seeing areas in the midwest, not so much in the northeast, a little bit in the south that are starting to bump up a little bit. >> in terms of prices? >> in terms of prices. you had the inventory that peaked at 12 months is now down in the five-month range. the average time a house stays on the market before it sells, so that's one indication. by no means if somebody were to tell you a few years ago we'd have 3.25% interest rates, 15-year rate at 2.99, what is the housing market doing, you would think it would be booming. >> do people need to rush?

is there too much complacency? i think a lot of smart corporations have floated a lot of long term -- these are rates you would dreamt about remember late in the '70s and '70s 17% for a mortgage rate. if i had to make a prediction where rates would be at the end of 2013 -- was it you that was mad that he had to make you -- >> yes. >> you were mad the company asked you to make a prediction. i said watching interest rates next year would be like watching -- >> paint dry? >> grass dry. or watching paint grow. those were my two analogies but cramer thinks they could go significantly her. if bernanke tells us where they could be, we could believe him. do people have time to have this once in a lifetime? >> i do think there's some time. again, it seems to be that things have bottomed, right, you look at housing prices and inventory of homes, it looks like things have bottomed. you're certainly not hurting yourself by any means to wait for rates to go lower and

housing prices to go lower. i think it's definitely a good time to buy. to have a situation where you have the rates where you're at and housing prices where they're at, usually they're opposite, right? they're inverted so -- >> given what joe just asked -- >> do you think they could go up next year? >> i don't think they're going to go up next year. >> could they? >> they could. i don't think it's likely. i don't think it's likely, i think the fed will -- >> because the economy will be so weak, right? >> you could have an increase but you could have marginal depression which is what i wanted to ask dan about. on the surface if you don't understand how you fund your loans, it looks stupid to give somebody a 30-year loan at, what are we talking about, 3.5, 3.4 in some places. >> right. >> and joe's suggesting interest rates could rise. but that doesn't really get into how you fund yourself. >> right. >> is it dumb to come in and make a loan at 3.5? >> most mortgage companies are taking the risk off the table

and selling the loans in the secondary market. >> who is buying them? >> the fed as you know is buying. and you still have the pension funds and insurance companies and you still have worldwide international buyers that are buying this stuff. >> so, we are. >> we are. >> they average, though -- >> dumb money. >> it averages 6 1/2, 7 years, even though it's 30 years, the average duration before people pay off and move or refinance. the lower the rates go and the longer the mortgages will last theoretically. especially if rates go up because people won't have incentive. >> the fed recently has indicated they would like to see rates go even lower, right? >> i have said publicly that a fed member was opining with me about a 2% mortgage. i don't know if it can go that low, but the conversation was something along the lines of i said they're really low. could they go any lower? what do ul think would happen if mortgage rates were 2% or -- in

the 2% range? >> is that possible? >> i certainly think it is. now i believe anything is possible. two years ago if you would have said you'll see a 15 year at 2.99 which it is this morning, i would have said you're on some kind of drug. anything is possible. will it really help the housing market? if it's not sparking it at 3.5, 2.99, i don't think that's the reason. i think job security drives it more than anything. >> my argument has been and i'm happy to change this that it may not be the answer, but it's part of the solution and it helps a bit. but the important question on the other side of that is it doing harm? >> well, i don't know how it would do harm unless you started looking at, you know, bubble situations, again, like we had in the '05 or -- >> inverted bubble? >> i don't know what's an inverted bubble, i don't know what you would call that. we're not anywhere near

something like that. >> the harm could be the fed is growing its balance sheet too high and it will have to eventually settle. i think the fed can hold on to the mortgages and not do itself harm by selling them into the market at the time. and the other harm that's been mentioned is it's ruining the normal function of the market and the other harm out there is the fed is forcing people into other riskier assets, can't sit on the mortgages anymore, they got to go other places they shouldn't be. >> it looks like cash is still very, very scared and on the sidelines in everything, right? you have cash in banks at an all-time high. it's never been this high before and you do have some appetite for borrowing but not anywhere near where it is. and what's the policy that will shift the cash on the banks' balance sheets into the economy. i don't know if raising the capital gains rate will do but, you know, there's got to be something that the banks will eventually do with it. >> what does someone need at this point? the other big criticism has been

people that can use the rate relief in terms of what they're paying can't get access to the credit. what does someone need at this point to go to quicken loans and be able to refinance their mortgage? >> there's sort of two worlds going on at once now. you have the harp world which is the federal program that says if your loan was originated before june or june of 2009 or earlier and the loan was guaranteed by freddie or fannie right now there would be no look at the value of the home currently if your payments are on time. a lot of people don't know that. >> i didn't know that. >> and you can go up to 200% loan to value or even higher. there's no loan-to-value limit. if somebody is under water today and this is a shocking thing i'll tell you right now -- >> when did it happen? >> it happened over the last six months but there's been a -- a year even. there's been a few changes or loosening of that even. here's the thing that will shock you. our company is pretty good, our company quicken loans is pretty good at getting ahold of the consumer. we like to pride ourselves on that. only one in four homeowners that

we have the information on that says you'll qualify for this harp loan who's under water and who's rate is much higher than the market. >> 6s, 7s. >> 6s, 7s, 5s. we do three out of four. some we can't get ahold of or they don't believe us. >> i didn't know about that either. we talk about it all the time. this is something that changed in the last six months. maybe you went before and you tried to get refinanced but the assessment came in at the wrong level. if you're one of those people, you should go back and try again? >> absolutely. there's a boatload of consumers, i mean a boatload, tens of millions right now, who doesn't believe that they can refinance. they're making their payments on time, you know, so for fannie's and freddie's standpoint, too, you know, it's a win/win. >> performing mortgage, current on payments, a loan to value up to 200%. >> it can go higher in some cases. >> do you even need an assessment? >> you don't need an appraisal in some cases. you to a quick loan to value,

you don't really need one. this is if the loan was guaranteed by fannie and freddie. >> and it would happen before june of 2009. >> june of 2009 is when you -- or earlier. >> well -- >> dan, what's your phone number? >> we got a lot to talk about. "usa today," i want to ask you about all the cabs have gone -- all the athletes, man, anybody who has become a target has a gun, did you see that? "usa today" front page. 70% of nfl guys that make some serious money, people know where they live, for protection they buy a gun. i don't know. you don't know? >> do i? yes. but not with me right now. >> you are just glad to see me. questions about anything you see on "squawk," treat us @cnbc. still to come, union showdown, and then future of netflix and then in the next half hour a leading economist weighs in on the jobs report.

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welcome back, everybody. our futures this morning are indicated a little bit lower. dow futures down 17 points. s&p futures off one point. obviously we've got the jobs report coming up in an hour and ten minutes and it could make a

difference at how trading goes this morning once the opening bell rings. two different forms of right-to-work legislation being pushed through the michigan legislature. despite protest from unions the state republicans used their six-vote edge to prohibit private unions from prohibiting nonunion employees to pay fees. they have to agree on a single bill. the law would make the home of the u.s. auto industry the 24th right-to-work state banning mandatory unions. a facebook post back on july 3rd leading to a wells notice for the ceo of netflix. the stock took a hit after hours. joining us on the "squawk" news line, the managing director of equity research at webbush securities. you have a very different analysis. you said it should have been an 8k and the information of a billion hours, that that was material? >> i think -- yes, on both of

those. i think that reed is defining public the way noah webster defined public, and unfortunately webster doesn't run the s.e.c. the regulations are pretty clear and they specify the manner in which you can make public dissemination of material information and facebook just isn't one of those. >> so we're wrong, then, we have been under the impression that a ceo could come on cnbc and release nonpublic information and that would be okay because we're public. you think the only way to do it is an 8k? >> there's a specific rule for news outlets, i know it may shock you guys but you qualify. >> i don't know why 243,000 people that can look at the -- >> are the rules outdated because they haven't taken a look on social media right now? >> i think that's fair. i think the rules should probably consider this and reed writing his blog post yesterday his facebook post yesterday taking on the s.e.c. is maybe directionally the right thing to

do, but it shows some hubris. the s.e.c. hasn't done it yet. so, don't decide for yourself that facebook is a news outlet. i'm one of the 243,000 and i didn't see it until the next day which was july 4th. >> why do you think it's -- people knew, what, people thought they had 900 -- thought they had 900 million views and then he said now we got up to a billion and that's -- i mean, where do people -- why is that material? why is that such a big difference to what people previously thought? >> i think your question and reed's response are both disingenuous. the stock was up $4 the day that he posted it. it was up $9 the next day, so when the material -- when the information was widely disseminated, that stock went from averaging under $70 for the 20 days prior to his post to averaging over $80 for the 20 days following. >> why is it such a big deal? >> a material movement in the stock. >> but why was it such a -- was it a big shock that there were a billion views?

what did you think the views were before that? >> the last time that they publicly disseminated the number of views they said 2 billion hours for the quarter in december. seasonally viewing in june is lower. so i thought actually it was maybe 700 million and to be perfectly honest i don't regularly read the netflix blog on netflix.com i didn't see the vice president who said nearly a billion hours back on june 4th. i don't think anybody saw that. so, no, to not think this was public i do not think it -- i mean, i do think it was material, and honestly i think if you just look at the share price clearly investors agree with me. they moved the stock higher and, oh, by the way, the stock dropped $23 more when they reported exbecause it turned out the billion hours wasn't an indicator of their financial health, earnings was. >> isn't the issue on that the medium that he's using? i mean, if you would have said that on cnbc or some other outlet, the stock would have moved as well, probably --

>> please, guys, i mean, facebook doesn't use facebook to disseminate material information. if facebook doesn't use their own platform, then i would say the average reasonable person knows that's not a news outlet. >> it's always so hard to, you know, as an analyst i'm surprised you would ascribe definitely ascribe a movement in the stock but, you know, you say that citygroup recommendation didn't do anything? >> it moved up $4 on the citigroup recommendation. that's a lot. >> sandy now was supposedly caused by global warming just because it what happened, you know, when we had warm weather doesn't mean it was caused by global warming. but anyway, thank you for your time. [ male announcer ] it's that time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference.

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welcome back to "squawk box," everybody. in our headlines we're about an hour away from the november jobs report and the numbers are expected to be impacted by sandy. the dow jones forecast is

calling for new 80,000 nonfarm jobs. the reuters forecast is calling for 93,000 new jobs. ibm is implementing a significant change to its benefit program. starting next year matching contributions to employees' 401(k) accounts will be given in one lump sum on december 31st. if a worker leaves the company before december 15th, they won't get anything from that payment. also video game sales fell 11% in november from a year ago that's according to the new figures from mpd group. a smaller-than-expected drop. the biggest selling game was call to duty black ops schs 2. joining us is a globe strategist. good morning. >> good morning. >> let's talk about ranges and if we're in the 50 to 100 ranges and 150 to 200 are there three different outcomes or takeaways from that? >> i think the first two won't make much difference.

>> 50 to 150? >> yeah. if you get a very strong report i think it does make a difference. because it says the economy is so strong it can actually withstand the distortion from hurricane sandy and withstand some of the hesitancy to hire ahead of the fiscal cliff and if the economy is doing that well with all of the uncertainty out of washington right now imagine what it can do with some of the uncertainty resolved. >> how likely is that? >> if we get a strong number it will cause markets to react. >> let's underline the first thing you are saying. the market has discounted sandy effects from this number and it's not going to read overall economic weakness. >> that's right. i think the market will have a very hard time focusing on them because you have both the distortions both sandy and also potentially a delay in hiring because of the fiscal cliff. we know they are both hard to read and they're also both temporary, if you were going to go cliff diving in four weeks it's hard to focus on these two issues right now. >> that would stand to also

affect the upside, too, right? if i see 150,000 to 200,000, i would know the economy's resilient and i know the economy could go over the cliff in four weeks. >> the question is how could investors play this, the key thing to recognize is we don't know exactly what the jobs report will tell us about momentum because of the d distorti distortions, as soon as they come to an agreement even in early january you know the uncertainty tax will go down. the uncertainty on the markets and the economy will go down. and when uncertainty goes down that should push stock prices and interest rates higher, i wouldn't downplay this number. i'd try to position myself to take advantage of a balance in both the market and interest rates when we get the fiscal cliff resolved. >> give me a sense, give me a number, what happens on the day that becky goes on tv and says breaking news, a deal has been reached between boehner and the president? how much does the dow go up? >> well, i'm not going to give

you that. >> come on. >> well, obviously, i think it should be worth hundreds of dow points if and when that happens. but, of course -- >> that would be becky, though, right? >> we'll see hints this is coming and we'll probably get news the market will bounce and the day after people may sell the news. >> right. >> but the basis point is this, though, there should be an urgency among investors right now if they look at the relative valuations. we still have -- this has been a tale of two tales here. we've got the tale risks and tale evaluations and the problem if you get past the fiscal cliff one big tale risk is eliminated and that should push interest rates and stock prices higher. the valuations are very extreme. long-term rates are just way too low. given an economy that's -- >> it doesn't matter what the deal looks like, it still goes up a couple hundred points? >> i think that's right. so long as the deal -- i think what we're going to get is a two-stage deal where you get a down payment in 2013 which brings the deficit to gdp ratio down from 7% down to 6%.

if we could do that along with some long-term agreement we'll get another trillion out of entitlements or a trillion from taxes or somewhere else but a range of what we'll do in 2013 where we'll get the money for the rest of the sort of fiscal issues over the next few years but some down payment. we get the down payment and it's a reasonable downappointment not one that will crush the economy, i think the market could react very well to that. >> what's your opinion on what's going on in the economy ex-sandy? you were saying a better jobs number would show the economy is resilient. do you think it is resilient, if it doing, if you can take out the effects of the hurricane, better than people think? >> i think it's got so much potential. i see all the hesitancy here. but pent-up demand is forcing the housing market higher. pent-up demand is forcing the vehicle market higher. consumer finances are very much improved. people have locked in the 30-year, fixed-rate mortgages at a wonderful rate. everything is actually pretty

primed here, it's the cloud of uncertainty. make t when it breaks, it could take off. i think it's still a 2% economy but it has the potential to do more than that if we can reduce the amount of uncertainty in washington. >> i made one of my way 13 predictions that we'd have one quarter of 3% growth. what do you think? >> we're so conditioned to the 2% world. to get the rate down you'll need to put 4% somewhere along the line i think we can get a 3% quarter and, you know, i'll raise it. i think we may get a 4% quarter. i don't think we'll get 4% for the year. >> what about 5%? i'll say 5%. >> all right, david. thank you very much. >> thanks for speculating. >> david kelley from jp. avoiding a debt disaster? what will it take for politicians to rise above the partisan politics and avoid the fiscal cliff? we'll talk more with our guest host dan gilbert.

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welcome back, everybody, on this friday morning. the futures are still hanging in there. we're looking at the futures just slightly lower at this point. it looks like the s&p futures are down about two points below fair value but, of course, we do have the jobs report coming up. dow futures at this point are down about by 22. what impact will going over the fiscal cliff have on stocks? we've been talking about it with our guest host dan gilbert. we've decided we have time? >> as far as the fiscal cliff? >> no, we have time for mortgages. >> i think we have time. the fed has stated they want to hold short-term interest rates through 2014. we know they don't technically control long-term interest rates unless they are buying mortgages which they have done over the last couple years. so, you know, it appears by all measures that you have some time, but you never know because these things can change very rapidly. rates tend to go up higher a lot quicker than they come down.

>> you've seen the commercial allied financial where they say the greatest economists in the world and a nobel laureate and do you know where interest rates are going in a year, and he says no. we should know what cd rates are going. >> i think they've done the best they can -- >> what is the maximum amount cd rates could fluctuate in the next 12 months? >> could fluctuate? >> a quarter pobet? >> a quarter point. >> where are they? >> 0.3. >> long term? i saw the ad, i saw a full-page ad in the detroit paper recently that a bank was bragging about their incredible interest rate and getting 1.1% for a one-year cd or something like that. think about that. that's almost like your in an alternative universe if someone told you that. >> 1.1. i've seen 0.7 in some places. >> listen to it, the high degree

of confidence in a year you don't think it's 5%? >> exactly. if the economy were turned around -- >> the commercial is totally fallacious. >> let's pause what david kelley was talking about. the fiscal cliff deal is done, uncertainties are removed from the economy and we get 4% or 5% growth rates. maybe the fed's hand would be forced if you had a precipitous drop in the unemployment rate down to 5 1/2% or 6.5% but they're about to do something extraordinary here, right? next week they're going to announce this new thing and they're going to get rid of operation twist and they're going to replace it probably with outright purchases. and it could be that they're buying $85 billion a month in long-term securities. >> okay. where are they getting the money to buy that? >> they're making it. >> they're just printing it. >> not even printing it. you wouldn't have to print it today, it's an electronic thing. they're typing it essentially. >> will the resolution of the fiscal cliff and even some progress on our long-term

problems, knowing that at best we're just putting off austerity, sooner or later it's coming, right? higher taxes and lower government spending, right? you combine that with reinhardt, rogoff and the idea we're in a 2% world all of a sudden, would doing the fiscal cliff make it possible to do 5% or are we just -- we know austerity's coming and we know -- i'm saying we've got a lot of debt -- i'm saying that we are maybe in a new -- we might be in a new normal. is there any reason to think we could do a 4% or 5%? >> nobody wants to take an automatic hit. the number you want to achieve and achieve it quickly, that's one aspect, but no one wants a huge hit, for example, to defense spending. >> do you think we'll get to 7% in unemployment? >> i do. 6.9%. >> even though we're facing the same kind of austerity as europe. >> i think american companies put americans back to work. >> and freeing up the corporate cash will overcome -- >> get rid of the uncertainty. >> why would the cash be freed

up? if you are raising capital gains tax -- all the things we're doing are negative. >> hold on. i guess i disagree fundamentally that the capital gains tax is the definitive reason why you would or would not make an investment. i think there's two pieces. one is the piece that i don't like the higher rate. the other piece is i don't like the uncertainty of not knowing what the rate's going to be. >> that, that's. i think it's been sort of known that people are not and companies are not freeing up capital assets, they're not selling them or making moves. they're sort of in a frozen state. the same thing with all the cash on the balance sheet, if you want to incent investment raising the price of the investment theoretically isn't a way to incent it, right? >> hold on. i thought the deficit was a big rob and want to a measure that helps reduce the deficit help the economy? >> i just don't know. in the capital gains sense i personally think and i think it's also been proven in the past if you lower rates it increases the revenue to the

government. we should be focused on revenue generation. >> let's talk about reality because you're somebody who has money and is looking at situations like this. has it changed your behavior on investments, you could make, you would make down the road? >> that's a great question. i would say me personally probably not. but, you know, i just -- when i look at the rest of the world and i look -- i can't understand it and i can't really know why do you think it is, why is there so much cash on the sidelines and earning such a low rate of return as we just saw pointed out? why aren't they investing it into things? what is holding it? i don't know -- >> what's happening at quicken loans, i know it's a privately held company. what are you doing in terms of jobs, in terms of -- >> we are doing really well. we positioned ourselves really well through the mortgage armageddon if you will. we didn't have the massive participation in subprime lending and all that stuff and so, you know, we're able to centralize the process and do loans from downtown detroit all over the united states in 3,000 counties. we have an operation in arizona and also downtown cleveland which we're highly invested in.

so, things have gone very well for us. >> you're a contrarian, you picked two cities detroit and cleveland. >> we believe in lake erie. lake erie we think is the future. >> man, you are getting good deals. >> we bought a bunch of real estate in downtown detroit and we moved 6,500 people to downtown detroit and so we're very excited about that and we think detroit is a -- >> do you think right to work would make a difference in michigan? >> do you know what, it's another great question. it's such a passionate, emotional issue in michigan, you know -- >> detroit to me, it's weird to me what we're really talking about is whether dues to unions are mandatory, is that what we're talking about? is that what we're talking about? >> dues and belonging to the union. >> right. so, if you have -- all a right-to-work state is you can choose whether to join the union or not? >> if the shop votes -- >> as a communist as a guy that lived in russia, how does it seem like that's good policy? how could you argue -- >> am i going to dignify --

>> if you are someone in a union who has been in it for a long time and you pay your dues, everyone else will benefit from what you're paying and someone is a hanger-on and get the benefits -- >> the right-to-work state in terms of employment. >> you remind me of guys in saudi arabia. when i was in saudi arabia i talked to a bunch of guys and what's your biggest problem, i was doing this thing on the economy. they said israel. it's 1,500 miles away and you're a country with all kinds of problems. the unions are 12% and declining and the republicans think the unions are the israel of saudi arabia. it's crazy! >> 24 states are right to work now. why is it such a threatening thing for individual people to be able to say i don't want to give money toe someone who i know is going to give money to one political party? >> i don't think that's crazy. i just think that -- >> explain to us -- i wa to hear dan's perspective -- >> unions have helped workers make gains.

>> you have a right not to. >> i want to hear dan's perspective on -- >> here's their view, i'm not saying it's mine. their view is if you allow it to happen then the union will be gone because people will say, well, it's a union shop and i can benefit by what the union did and everything but i'm not compelled to -- >> i'm not going to pay. >> therefore the union membership goes down to almost nothing and the union is gone. they view it as a union-busting move. >> i think it's different in right-to-work states where it's always right to work. >> but there are new rights to work. >> but i think it's because you're going into an older infrastructure. >> detroit was the capital of the unions. >> the fifth largest state i think for union involvement, right? >> and probably was number one. >> because it's not as much uaw anymore and -- >> and trade workers. >> okay. dan gilbert is our guest host. he'll be with us for the rest of the show. coming up at 8:30 eastern time we have the november report. the dow jones estimates the economy added probably 80,000 jobs last month. reuters consensus is higher, coming in at 93,000.

but we'll brick you tng you the and the reaction from our panel of experts. don't start your day without knowing the names that will make you money. joe has your list of stocks to watch right after the break.

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welcome back, everybody. random house is giving employees a $5,000 bonus to celebrate a profitable year. the payouts cover employees from

top editors to warehouse workers. you can call it 5,000 shades of green. many say the publishing industry is dying random house published e.l. james "50 shades of gray" and it is profiting big time, it's tond "the new york times" best seller left for 37 weeks and counting. another twist in the hp economy saga. "the wall street journal" reports that auditing wasn't all deloitte did for that company for autonomy. the uk unit of deloitte was in charge of signing off on autonomy's financial statements also before hp bought the company in 2011. but deloitte was also paid significant fees for other work it did for autonomy like due diligence work on a potential acquisition and to many observers the multitasking is potentially an industry problem. let's take a look at stocks to watch this morning. we'll start with the first one, we'll look at enbridge which at this point is not doing a whole lot. it's indicated up 0.3 of a

percent. enbridge has raised its dividend by 12% and it sees strong growth in its outlook for next year. next on the list which is coming up now is cooper. cooper fourth quarter profit rising 27% on continued contact lens sales. so, this is -- there's, like, six different coopers at one point. this is the contact lens. there's cooper tire. >> different one. >> cooper company, and cooper. >> dan, when you take a look at everything that's out there, everything that's happening in the economy, what's happening with washington, what's your biggest concern? >> well, biggest concern for us right now and the quicken loans side is dodd/frank and, you know, the new regulations and the uncertainty of all of that. i think it was something, like, 1,100 of new pages of regulations just dedicated to mortgage alone. so, our folks are going through

all that trying to understand that. trying to actually work with the regulators to get them an understanding of what happens on the ground floor on the ground level of mortgage product and production and all that. so, that's probably our number one concern. the uncertainty of knowing what will happen with that. >> one thing i hadn't realized before when you are looking at ideas, good commonsense ideas at the time, the idea that if you are a mortgage broker you should have to hold on to at least a percentage of that so you are not making stupid loans, so you have skin in the game, too. we all settled on the idea, yeah, if you held 5% of it, that would be a good thing and keep you from giving money to people who would never repay the money. you pointed out there's a problem with trying to do that. >> a little bit of a problem, if a mortgage broker, let's say, we're a little bit different, but a mortgage broker if they're making, you know, 2%, 2.5%, 3% gross and the loan amount is gross revenue, holding 5%

against that mortgage wouldn't work, right? >> because you'd be losing money. >> and they're not highly, you know, highly -- they don't have a high net worth. so, you know, you can deal with it through net worth requirements maybe capital requirements overall. but when you try to say, you know, you're going to hold a percentage of that mortgage, there's huge disincentives for most mortgage companies, banks, obviously the loans can come back to you and they can be put back to you. fannie and freddie are putting back more loans than they've ever put back to the banks and there's a lot of argument and fighting going on about this. so, you know, there's definitely a disincentive. on the mortgage broker side, i think what you're talking about, you know, there's just not enough net worth there, you know, for that to be a big threat. but then again those loans are being underwritten by the larger net worth companies and they should never get past that point, you know, they shouldn't be approved because there's a huge disincentive. >> is it harder to flip the loans back to the government than it used to be? i asked because i refinanced with quicken loans. i went through your 800 line and

i did it a year and a half ago and i did it a few months ago. the first time i did it you sold it immediately to fannie or freddie. this time you still own the loan. >> we don't own the loan -- >> you hold the servicing on it. >> in the last two years that's been a big strategic move of ours to move back into the servicing business. we service 99% of the loans we originate these days. that's changed over the years. when you say flipping back to the government, fannie and freddie really are guaranteeing, you know, it's an implied guaranteed as they say, but most of the loan production in today's world, right? >> more 90%, right? >> it used to be half or a little less than half. right now you have to -- >> they're the only game in town. >> in fha as well. >> dan gilbert, again, is our guest host. he'll be with us for the rest of the program. when we come back, we've got the november jobs report. it's 35 minutes away. jared bernstein and mark zandi are here with expectations.

we'll have that when quarterb"s box" comes back.

the countdown is almost over. we'll get the november employment report at 8:30 eastern time. the job numbers are expected to be depressed by superstorm sandy. we'll get instant analysis when the report comes out. plus, a motor city makeover. >> what does opportunity look like? it looks like detroit. >> guest host dan gilbert on his efforts to revitalize detroit as the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with becky quick and steve liesman and andrew ross sorkin is off for one more day. our guest host dan gilbert, founder of quicken loans and owner of the cleveland

cavaliers. we'll talk about a lot this hour but the big 50 is the november jobs report. it comes out at 8ky there. the dow jones news wire poll of forecasters, we thought this was so interesting we wanted to get a reaction shot of you. did you see how long you were on? we wanted you to -- we wanted a lot -- we wanted angst, we wanted suspense and disappointment. >> how did i do? >> i don't know. we were waiting for something. >> i didn't know i was on. >> you were. the button was stuck. the economy likely added 80,000 jobs last month, reuters consensus is higher at 93,000. the unemployment rate ispected to hold steady. mark zandi and jared bernstein will join us in a moment with predicti predections. a strong earthquake off the coast of northeasten japan a couple hours ago triggered a tsunami warning. the 7.3 quake shook buildings as

far away as tokyo. no problems have been detected at the region's nuclear power plant. the tsunami warning was for the same area that was devastated by an earthquake and a tsunami back in march of last year. this is two years ago actually. >> march '11? >> march '11? >> yes. >> okay. i take that back, march of 2011. we'll continue to follow the story and bring you developments as it's happening. >> a year and a half ago. i was trying to figure it out. >> your life is defined by that. in corporate news netflix receiving a wells notice from the s.e.c. regulators warning that they may bring civil action against the company and its ceo for violating public disclosure rules with a facebook post. on july 3rd ceo reed hastings posted "netflix monthly viewing exceeded 1 billion hours ever

for the first time in june." the s.e.c. regulation requires that public companies make full and fair public disclosures, material nonpublic information. hastings is dismissing the s.e.c. contention saying, first of all, he didn't think the facebook post was material information. he also said the post was public because it was accessible to more than 244,000 subscribers to the page. we spoke with an analyst in the last hour who disagreed with the statement. he said, first of all, the rules are clear you can't use facebook. and second of all, he thought it was material. but you can bet this will be played out time and time again. there was stock movement on it and then -- which would almost suggest it was public if people found out about it. second of all, the market then later dropped it because the rest of the earnings didn't match up to that kind of forecast. but this is something that's hashed out -- >> i've been trying all morning -- >> i've been trying to find the reg. it's very unclear. we haven't talked about it. but i'm trying to find it. >> if you can e-mail it in, the

section dealing with media. >> and who qualifies as a media outlet. >> who qualifies. >> what we said if you said it on cnbc it would be considered a public disclosure. >> i don't know foreign media. >> i don't know. >> see, the government can't be involved in sanctioning official media because that two, then, be a first amendment issue, right? so they have to somehow -- >> how do you figure this out? >> jeffries is the latest to accelerate payment of a first quarter dividend into december. >> wow. 30 billion and counting. >> i haven't looked at this but apparently if you release something on cnbc it is considered public and our competitors don't count because they have no viewers. let's check on the markets u.s. equity futures have been weaker ahead of the jobs number but at this point the dow futures are only down 25 points and s&p futures are off by 2.8. asian stocks rallying to 2012 highs overnight. among the catalysts were that

china's economy is stabilizing. the nikkei hit a seven-month closing high yesterday. and in europe you can see the markets are indicated slightly lower but, again, these are the same sort of moves in the futures here. a lot could depend on what happens at 8:30. >> why are you shaking your head, joe? >> nothing. i was getting info. a new survey by potomac research group finds 60% of leading investment professionals predict a sharp decline in the economy if the government fails to make a deal. it's defined as a more than 10% drop in the dow. he's still shaking his head. the group polled hedge fund and pension funds and money market managers and 56% surveyed said a deal to avoid the fiscal cliff by year end. 44% predict failure in the ongoing negotiations. let's get back to the jobs report due out, in less than 30 minutes, joining us now is mark zandi, chief economist at moody's analytics and jared

bernstein former economic adviser to vice president joe biden. he has the finest nod and smile when he's introduced of any of our guests, he's currently a senior fellow. do you practice in front of a mirror, jared? >> i'm just so happy to see you guys. >> it's totally natural the way it happened. >> this is what i like to do at 7:00 a.m. in the morning. it's 8:00 now. this is what i like to do at 8:00 a.m. in the morning. >> we're glad to have you. >> especially with mark "hurricane" zandi. >> i know. he's a boxer. the hurricane. >> the hurricane zandi. >> i got to work on my smile. i have no hair. i better get the smile right. >> you just mentioned jeffries moving up its dividends. d.r. horton is the latest. it's now saying its dividends for all of 2013 will be accelerated and paying 15 cents a share paying at the end of this year. >> the corporate scum that keeps declaring the dividends. i see you shaking your head. you're nauseous. you're sickened. >> i'm glad to hear the top 0.1

percent continue to do great while the middle-class continues to struggle. >> i knew you'd like that. what does corporate america have to do with the middle-class? nothing. anyway, mark, what are your forecasts for jobs today? >> i'm looking for a gain of 105,000 payroll jobs. >> higher than ever, right? but you cheat because you do the adp report. >> well, i am consistent with the adp report, you know, since i got that gig i'm consistent with the adp report and i believe in it. so, we'll see. >> i wouldn't even -- jared, i wouldn't even try to compete with him. he's got all the inside information. he's got nonmaterial information here. >> the problem is -- listen, the problem is i pay very close attention to what mark says. but the problem is that inside information like that doesn't help you on the jobs report that much as i suspect mark would agree. there's just such a large confidence interval around the numbers and in a month like this i've got two words to you,

signal-to-noise ratio. maybe that's not two words. there's two kinds of economists, those who can count and those who can't. anyway, my point is that -- >> what is your point? >> my point is that i would look for 80 total, maybe 90 on the private side on the payrolls with unemployment ticking up to 8 or 8.1 and i do think when you have a hurricane of this magnitude hitting the most densely populated labor markets in the country which is what it did, it's going to take a whack out of the payrolls. >> jared, i wonder what you think about employment for next year and, you know, we have the fiscal cliff and let's say that the only thing we did do, the only thing really that seems like the president is most focused on, let's say we did raise taxes on the top 2% and didn't do anything else. how would that bring down the unployment rate next year? >> well, i think the resolution of the cliff would very much help on the macroeconomy on the

unemployment rate, and, you know, i take my prediction vis-a-vis what you said from the congressional budget office, the nonpartisan scorekeeper, that tells us if, in fact, the middle-class tax rates are frozen on 98% of households in the top 2% reset at higher rates, that might cause a tenth of a percent gdp growth next year, so i consider that to be minuscule and i think the resolution of the uncertainty would help boost the macroeconomy and jobs. >> mark zandi, go ahead. >> i was going to say if the only thing we do is allow the tax rates on the upper income groups to rise, that's the only thing we do, then, no, the economy's not going to go anywhere. we've got to address the cliff. we've got to raise the debt ceiling. and most importantly, we need long-term deficit reduction to get the fiscal sustainability. so, they've got a lot more to do than simply working on the -- >> i agree with that. in fact, the way i put it which is what i meant which is the resolution of the cliff. but i don't think the cliff gets

resolved until we resolve the tax rate issue and then the other parts can follow. >> that makes sense. >> there's an editorial, op-ed in "the times" today that says do you know what, it's an aging society. that aging society means higher payments out to the wealthy -- to the elderly from the government. higher medicare spending, higher retirement spending, and especially something we have to get used to and we're going to have to bump up the share of the economy, that is, from the government because that's the way we're going to have to live if we want to take care of the elderly. mark, is that a reality? does that mean higher -- i'm sorry, lower long-term growth rates for the economy? >> well, yeah. i mean, two things. one is it's right that because of the aging of the population, all else being equal, government spending as a share of gdp will rise because as definition the elderly will be using medicare and social security. but that's not the biggest part of the increase in what's going on in medicare and medicaid and

social security. it's really the growth in health care costs. so, if we can control that and bring that rate down, then we'll be fine. we'll be okay. but you're right about the economy. the broader economy. because in the aging of the population, and people retiring, the rate of growth in the labor force is going to slow. it already is slowing and the underlying growth rates in the economy are going to be weaker. here's the statistic of the day, the most important. the largest single age group in the country, there are more of these folks than any other age, joe, do you know what that is? do you want to take a guess at it? you may be the largest single age group. how old are you, joe? >> yeah -- >> 55 plus? >> 60 is the new 40, and i'm not 60 yet. i'm not 60 yet. >> time-out! >> tell me. >> it's 53. 53. >> that's around what i am. that's in the ballpark. >> yeah. >> standard deviation. >> so, another ten years from now, you know, we're going to be retiring. i'm actually 53.

i represent the largest single age group. >> no, no, that's two words for you. andy rooney, i'm not retiring in ten years. >> okay. all right. >> mike wallace. >> a lot of people will be. a lot of other people will be. and so that will -- >> i guess one thing that comes to mind is the -- is another key statistic here which is that i think over the past decade the labor force grew about a percent per year and the forecast for the next decade is half a percent per year, so that right there will slow down the potential growth rate of gdp. i mean, there are -- >> jared, i just want to give people a way to ruin their christmas holiday. i did this at thanksgiving which is take a count of the number of people around the table and count how many people are working full time to come up with your family's dependency ratio. i asked a lot of people -- >> you must be real fun at the holidays. >> half of the people weren't working and half of the people weren't working. basically the dependency ratio. >> that's another key point. mark and others are absolutely

right about some future potential pressures on growth. but the fact is we still have a huge output gap right now which means we're leaving tons of resources on the table mostly in terms of hours worked and a trillion dollars of gdp if you look at the difference between where we should be and where we are right now. before we worry about kind of what's baked in the cake in the future, let's mop up the output gap now. >> all right. >> all right? >> all right, gentlemen. thank you. mark zandi, mark "superstorm" zandi, and jared bernstein, thanks, guys. coming up we're counting to 8:30 a.m. eastern for the jobs report. the final predictions from a panel of experts ahead. and don't forewet the nail of the number sweepstakes, tweet your payroll predictions for your chance to win a cnbc picture frame signed by the "squawk on the street" gang. back in two minutes.

coming up, the campaign to rebuild detroit. bringing in labor to fill job openings, incentivizing workers to move downtown, overhauling derelict buildings. investing in local talent. guest host dan gilbert is at the center of it all. how he's revitalizing motor city next. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade.

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welcome back, everybody. our discussion on right-to-work states in reference to republicans in michigan passing legislation on that there. it's been sparking quite a reaction on twitter. in fact, unions were a very good thing there in the early days. today they are a detriment to business and economy. another says that we must make the union outlawed, eliminate unions on this country! and brian turner writes in and says right to work states means right to work for less. if you hear anything we're talking about tweet us. we hear a lot about how people are looking for jobs, but some say manufacturers are saying that they are just frustrated with constant job openings and no one to fill those positions. cnbc's phil lebeau joins us with more on that story. phil, good morning. >> good morning.

we're just outside chicago, start of the first shift here. this is where they make components like this that will go to the aerospace and electronics industries. they have 10 to 12 openings here and this is a story that we're hearing throughout the manufacturing base in the united states. take a look at how many manufacturing openings have been created over the last three years. it's gone from essentially 90,000 up to 247,000. some of those openings they seem like they're permanently open. we went down to metal technologies an auto parts supplier just out of bloomington, indiana, they have five to seven jobs they're ready to fill but they can't fill. in fact, they've had situations where they've had applicants come in, they've hired them and then the people who have been hired have said, do you know what, no thanks, i'd rather stay unemployed. >> we've had people that we've interviewed, that we've agreed to hire, and at the end of the day, they've turned around and said we're not going to take that job. we just found out that

unemployment benefits have been extended and they don't take the job. >> that is a common story in the manufacturing industry. this is a big deal because 33% of the auto final assembly plants in the u.s. now run three shifts. you need to fill the second and third shifts. in fact, when you look at the auto parts suppliers over half of them run three shifts. guys, the bottom line is this, if the manufacturers cannot fill the second and third shift openings, they're going to go to light manufacturing, but there's a lot of demand that they're not able to meet. here, 10 to 12 openings they would fill immediately but the owner here said they had zero -- zero -- applicants for the most recent job postings. >> is that because people don't have the qualifications for these jobs? it's astounding when you consider that we're at 7.9% unemployment and that probably underreports the people who are really looking for jobs. >> some of it is because they don't have the skills needed to run complex machinery, but a bigger part of it is, becky,

they'll take people and train them but they find people will not come in and start at $12 or $13 an hour because they say it's not worth it. it's not worth it to start at $12 or $13 an hour. you will hear this from all the manufacturers. this is a very common problem in the united states. >> wow. i'm kind of stunned hearing this. this is a new phenomenon, this is a new problem? >> it is always been a little bit of a problem but it has really perked up over the last three years. i mean, the level of frustration, becky, i cannot convey this enough when i talk to bill black the owner here, he essentially said he's thrown up his hands. he sometimes wonders if people just don't want to get up and go to work and you start at $13 an hour here. part of it is people don't want to start at $13 an hour -- >> because? >> ultimately the people here are making about $29 an hour. it's a matter of whether or not you want to work in a manufacturing job, becky. is there that demand in the united states. >> dan gilbert is our guest.

>> what is the alternative? does this mean that they may be on some kind of program or some kind of -- you know, that they're making more or close to $13 an hour? >> phil, what do you make by not working? don't you have to make more than 30 grand to offset what you're getting in government assistance. >> you would think that. when we talked with some of the manufacturers they're telling us that they've offered people to come in start as an apprentice making $500 or $550 a week, that's not great money but that's what they're starting at. a lot of people said i'll take $450 and stay on unemployment. i know it's hard to believe. >> i don't think it's hard to believe. that's where the argument comes from on the other side of, you know, of all these well-intentioned things we do if you're making $450 and you're watching, you know, katie couric during the day who wants to sit in there, you know, slaving for eight hours? >> sitting there watching katie couric during the day. >> i was watching a show called

"jail" yesterday. have you seen that? it's like "cops" but instead you're in jail. >> that's why you have the movie channel. what i'm wondering, sure, phil, some people will take the deal and stay home. but ultimately there's an upside to that which it helps people that can't find jobs anyway. there's a negative effect. >> okay. thank you. >> we know that, that's why we to it! do you have to point out there's a positive effect on unemployment? no, it's not! that's what it does! >> you don't agree? >> this is pointing out the other side. we know the other side, why do you think we do it in the first place? >> the research has been done -- >> why we do it in the first place. >> it has a 1% effect on the unemployment. >> they can't get anyone to work for $12 or $13. they should go to $20. they're competing with the government. they shouldn't have to compete with the government. >> not forever. not forever. >> joe, here's the other problem

with these jobs being open -- >> what? >> you guys, the other problem with these jobs being open, they can't fill the second and third shifts. they're losing business. their customers will go overseas. they'll go somewhere else. someplace that will fill that demand. if you cannot fill your second and third shifts, you lose your business. that's the bottom line. and we are moving towards second and third shift operations when it comes to manufacturing in the united states. >> wow. >> i also think that the person who may be on the unemployment, there may be also some cash businesses or ways they're earning money on the side that may even take them higher. so, therefore, it's a net -- you know, there's no net gain at all. >> phil, thank you. all right, coming up we're closing in on the november jobs report. we'll get back -- oh, i said good-bye to those guys. we need them back, mark zandi and jared bernstein for final predictions and they'll stick around for instant analysis when the report comes out.

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all right. here we go. welcome back, everybody. we are just a few seconds away from the november jobs report. again, ahead of the numbers we've been watching the futures and things have been held in a very tight range this morning. kind of bouncing around. right now the dow futures are down 25 points and the s&p futures are down less than three points. a lot of expectations that this will be a relatively weak number because of what happened with sandy. again, though, we'll get those numbers in a moment. cnbc's hampton pearson is standing by at the labor department and he has those numbers. >> off 146,000. november nonfarm payroll increased by 146,000 jobs. the unemployment rate is 7.7% average hourly earnings up 0.2. the last time we had unemployment rates this low was in december of 2008. private sector job growth last month, plus 147,000. however, we had downward revisions for both september and

october, 49,000 jobs fewer than what had previously been reported previously. on the question of hurricane sandy and its impact, the bls says, quote, it did not substantively impact employment and unemployment in november. december 21st two weeks from now there will be a better barometer when we get new data from the states. job gains in november. retail trade, plus 53,000. professional and business services, up 43,000. leisure and hospitality, up 23,000. job losses, construction down 20,000. manufacturing down 7,000. now, again, back to hurricane sandy. from the commissioner's statement, the storm we saw happen on october 29th, the next pay period ended on november 12th. the way bls essentially keeps score it says workers have to be off work for the entire pay period to be counted on the negative side. on the household survey side, persons who missed work for

weather-related events are counted as employed whether or not they are paid for the time off. we did have a drop in the labor force participation rate, down 0.2 to 63.6%. how did we get to 7.7% unemployment? basically the number of unemployed persons dropped more than the number of employed and there were downward trends in both those categories. lots to chew on. back to you guys. >> hampton, thank you. we are kind of scratching our heads. let's get more reaction from our panel. mark zandi and jared bernstein are here with us. mark, what do you make of this number? we've set this up as numbers were not going to be things we watched closely because of sandy. >> i'd say two things, becky. first i think these numbers will be revised as they get more information. the survey responses probably were very weak coming from new york, new jersey. they didn't supplement them it sounds like and once they get that information in, my guess is we'll get some big revisions

next month to be more consistent with what all of us are thinking. the second thing, though, i'd say is, you know, underlying sandy and all these other technical measurement issues it looks like the job market is holding firm which is encouraging in the context of the fiscal uncertainty and that's a real plus and it has to chiming through the data. >> i want to chime in here, the revisions just head scratching. they revised down october government employment from originally 13,000 to 51,000. now, first of all, i don't remember seeing a revision to government employment that big, but the notion that government can't count the amount of workers in government is a little bit beyond the pale and maybe -- >> revised it down? >> from minus 13 to minus 51. i don't know what you call it, 38,000 downward revision. and they revised up the private sector in the month of october, so that was good. the other thing it's very hard for me to believe here that there is not a sandy effect in

that i see a minus 22 and a minus 20 on construction. mark, would you just chime in on that? i mean, i guess what -- even if hampton is still there, i don't know, they said no sandy effect, but i'm seeing a minus 42,000 on construction and goods producing. how can that not be? >> no. i think that's some of the sandy effect coming through. with katrina what the bls did is they made some adjustments for the fact that they got a lot fewer respondents from the people who were affected by the storm and my guess is this go-around they decided no to the do that for whatever reason, wait for other data to come in. once we get that data coming in, they will revise down. what you're seeing in the construction jobs, that makes no sense. that's not consistent with what's going on in the construction trades and that probably is sandy effect. so, it probably is that we'll see more of it. one point about government, if you remember a couple months ago, we saw huge upwards

revisions to government employment and now they are taking it back. >> hampton -- what's the government said about sandy here? >> well, we only got these blanket statements as you said as far as the no substantive impact, but specifically on the surveys in the affected states, they said that even despite the superstorm, the responses to the survey was, quote, within normal range. so, no big swing there. that's another head scratcher, though. in my way of thinking. >> a couple of things jump out at me. first of all, this looks like one of those months where the gains in unemployment, the reduction in the rate, comes more from a decline in the labor force than more jobs from what i -- >> yeah, absolutely. >> so, the employment on the household side looks like it didn't grow at all which is actually fairly consistent with the past two months being large positive outliers. look, here's something we haven't mentioned yet, the

average workweek was unchanged in november and, in fact, the manufacturing workweek edged up a tenth of an hour. again, not what you would have expected given sandy. i agree with what folks were saying on the construction impact. but i also think that this report suggests that the underlying trend in payroll which is about 150k per month which is about consistent with trend growth in the gdp, maybe a little bit better, it does come out of these numbers and that is a good thing. >> hey, our guest host today is dan gilbert. dan, you said earlier in the program that in terms of what you see in the housing market through quicken loans, the most important factor is the jobs market. based on what you see in the housing market, how does that jive up with these numbers? >> well, i think, you know, we have seen pops in various geographies and various cities and regions in the country. both on the new home purchase side and existing home sales. but hasn't been a boom by any measure and it's certainly not broad across the whole united

states. so, you know, any employment numbers that are good are certainly good for the housing market because i think with the rates -- >> do you buy numbers like this or do you think it's weird stuff happening because of sandy? >> for me when i hook at these numbers, they're a little bit foreign to me looking at a month by month like this. but i think one month of data is probably not the tell-all here. >> jared, that's pretty good and that kind of growth. i'm just wondering whether we need to frame the fiscal cliff debate a little differently in that maybe the economy is strong enough to handle a couple more near-term negatives than we thought it was? i mean, howard dean says the best deal democrats could get would be to go over the cliff where all the bush tax cuts finally sunset. we seem like we're never going to let them go away for good even though they were designed to go away. does it mean it's time to maybe -- a little more belt tightening than we thought we could have? >> i don't think so. it's funny, i sort of take it the other way. the more i see momentum in the

economy, the more i see improvement in the job market, the more i think what a terrible idea it is to go over the fiscal cliff. i screw up a recovery that finally has a little bit of momentum with a housing market carving out a bottom underneath it for the first time in years in a way this kind of raises the stakes to get it right because we seem to be kind of on track. >> rick, did they take out -- rick, did they add those government jobs to get below 8% and now they're taking them back? is that what happened? >> you know, you don't want to go there. >> i'll go anywhere. i'll go anywhere. >> i'll tell you what the number is. >> hey, hey, hey, hey! >> go ahead, rick. >> hey! >> i asked him. >> go ahead, rick. >> how about one second, steve? one second, all right? we lost 350,000 people in the labor force. we're at a time in our history where it's all about jobs and tax revenues. the only people who bring tax revenues to the party are people who work. and the discussion is mainly about the people that are working that are way at the top.

i urge everybody to read the op-ed by our buddy peter shipp today because i've had so many discussions about, you know, in the '50s the tax rate was -- >> rick, that was great. >> i tell you what, we have issues in this country and data like this and talking about, gee, how much momentum we have in the job market, 350,000 people, poof, beamed to another planet. 1954 studestudebaker lark has m momentum than this economy. >> they don't have a figure of who made 91%. that was at 81%. >> amt, 400. >> that was at -- >> not a 91. they couldn't find a record. >> they don't have it. >> i know people that run the country on both sides of the aisle they love to get elected and they also love to fib about the statistics in any way they can. once again, i think my common phrase these days is shame on all of them.

>> all right. gentlemen, thank you very much. >> can i point out -- >> real quickly. >> well, 150k is the underlying trend and that was the same trend before the election, so nothing has changed here since the election. >> mark zandi, jared bernstein, rick santelli, gentlemen, thank you. the stock market is looking at it as good news whether you believe them or not, the market went down by 20 points to up 61 points, so you saw a big jump. tim cook's comments fueling speculation that apple could view netflix as a takeover target. that story next. and a programming note don't miss "squawk box" on monday. you heard of bowles/simpson? well, he's going to be on, erskine bowles a special interview, co-chairman of president obama's deficit commission, his take on the progress of negotiations to avoid the cliff. that's monday at 7:00 a.m. eastern. inspiration. great power. iconic design.

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we had a chance to talk to apple ceo tim cook, it aired on "rock center" and the topic of tv came up. >> it's a market that we see that has been left behind. it's an area of intense interest. i can't say more than that. >> that led to speck hayes that apple could target netflix for a

takeover and the shares rallied but they came back in late trading after the announce of the s.e.c.'s wells notice that forced the ceo -- >> just speaking up. jane wells tweeted yesterday where he said i go and turn on my tv it looks like it's 30 years old when i'm watching the tv and jane said he needs to buy a new tv obviously. he's got awn of the old black and -- i guess. but i thought it was funny because i -- anyway, sorry. julia boorstin joins us to talk about all the buzz surrounding netflix this week. is it a takeover candidate, julia? >> well, i actually think that reed hastings is going to try to get to get netflix's house in order, they've been living down the i would say communications snafu and i would say a public relations disaster when they tried to hike up prices and split off streaming the dvd business and ever since then reed hastings has been trying to show investors he knows what he's doing and i think that the disney deal he just struck earlier this week is a real

landmark for the company and shows that netflix can compete on the same level as an hbo and showtime and stars and i think he'll try to secure a deal like that and he's in the process of making the company more valuable and he'll probably try to continue going down that path. if he thinks he could get more for the company. >> netflix business model, julia, that they came in and bought rights to stuff to show it online cheaply until everybody else figured out that there was value there and so their business model was undermined. we were at a point when we last checked in, does netflix even have a future. you think it does? >> i think it does. because i think that they -- it hasn't been about paying little amount of money for content for a while now. netflix has been known for paying up, you know, a good amount of money for content. in fact, the media giants -- >> freeing up a lot of money and if you lose subscribers because

you raise rates and you don't have enough subscribers. >> they say they're not going to raise rates and if they're paying a flat fee for the content and they can grow the subscriber base, they're in good shape. it's all about growing the subscriber base. and the truth is if netflix is the only place you can go to get high-quality kid content or disney kids content which they have the new exclusive deal for, then parents especially are going to sign up for netflix. if you're picking between hbo and netflix, netflix now has, you know, has a real shot. >> okay. julia, thanks very much. all right. i don't know. everything -- >> what? here we go with sincinemax. >> everything i need is on -- >> i used to have netflix but i stopped -- >> we did get walking dead content for a while. >> all over that right now. got to watch the zombie thing.

you're a ten-year-old guy. >> yeah. you should look at what action figures we didn't buy last year because he wasn't into it, what they're going for on ebay. >> the zombie? you are very angry now that there's a movie being made by the guy who made "twilight" about zombies and it shows that zombies have feelings. my son is very upset about this that they'll ruin the whole zombies. >> they're not zombies anymore. >> been proven. he wants to do a science research project in school about zombies to see if -- is there a bacteria. >> one of the stars kept his daughter and wife zombie in a barn with other zombies because he couldn't face killing them and then they tried to eat him. >> i saw that. >> they don't have feelings unless hunger is -- >> have you watched it? >> we're set up to watch it tonight. oh, yeah. it's going to take a hiatus for a while. the one that came on sunday we're watching tonight. yeah, we plan it for friday nights. >> nice. >> nice. >> all right.

>> good family fun. something to look forward to zombie -- >> you should see the video game, too. unbelievable. there's five of them. >> dan, you don't do this? >> but i'm wondering if we have zombie fat heads. i was wondering if we do. it sounds like we need to have them if we don't. >> zombie banks. >> there were. >> there were zombie banks. >> and paul krugman said all our ideas were zombie ideas after i called him a unleny corn. is it bad? >> it's better than a zombie. >> i said he needs to apologize. >> fatheads, i like that idea. when we come back don't close out your trading day just yet. jim cramer will join us with stocks on the move. we'll be right back. a restaura, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores.

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welcome to the world leader in derivatives. welcome to superderivatives. welcome back to "squawk box." the futures right now positive taking that jobs number positively which came in above expectations on the labor department saying not a big sandy effect inside the number up 146,000. take a look at this. pot smokers in seattle celebrating the new found freedom. people openly lit joints under the space needle early friday morning. marijuana possession became legal under washington state law

on thursday after winning voter approval. why they had me read that, i don't know. it could have been joe or becky. >> you can't grow it or sell it so you can't obtain it legally. >> you can inhale. >> yes. the feds can still bust you. >> for selling it? >> for having it. >> in the "usa today" it points out that the country is still somewhat split on legalization but not -- if you get a state law, they figure stay away feds. >> what's the law? you can smoke it but you can't have it? >> you can have it. you can possess an ounce. you can't buy it basically because you can't sell it or grow it. it's very weird. 365 days to figure out all of this stuff. >> let's get down to the new york stock exchange. >> to our resident expert, jim cramer. >> is that what you were going to say? >> jim, anywhere you want to go with that. >> unbelievable number for brown

forman. i thought what was most interesting is jack daniels way old brand, high single digits growth. i think that people just want to get lost in whatever they can get lost in. booze, marijuana, doesn't matter. >> i love that assessment, jim. >> thank you. >> except you drink jack daniels and you drive 90 miles an hour and you smoke a joint you'll get hit by someone going 90 because you're going 15. may be distracted by the munchies you're having. >> john had that terrific cadillac with shot glasses in the glove box. >> i think about the dude. he was mellow. what about -- do you think that was a public -- i mean, if it went up that much, we had an analyst arguing that netflix went up that much after the facebook posting so that it must have been the reason but that didn't get him to admit it must have been public in that many people knew about it to bid up the stock.

>> this is a ridiculous story. i loved what you were talking about in terms of public disclosure. i don't follow him on facebook. i regard that as private disclosure. this is an abuse of power. the guy runs a private company. happens to be a public company. does whatever he wants. there's people that say take over at target. what? by the subscription list? i don't know. wait until they raise a lot of capital and then you can buy. >> that makes sense. >> all right. jim, thanks very much. >> tennessee honey. an extension of jack daniels that's very, very good. put some in your coffee this morning at starbucks. >> should be reasonably described to buy distribution of the information -- >> as you pointed out 25,000 paper subscription. >> coming up, our guest host is

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welcome back. dan gilbert is working to make detroit the next american great comeback story. dan, i didn't realize this. you are now the second largest commercial real estate owner in all of detroit second only to gm. what have you been doing? >> we were having a skyscraper sale in new york so we decided to participate in it. it was a great opportunity for us. we decided 2 1/2 years ago to move the first group of people downtown and since that time we've moved 6,500 people to downtown detroit and mostly young folks. they are excited about the city and not only is the auto industry doing better but there's a whole entrepreneurial

tech startup scene there. venture capitalist are there. a lot of mobile development going on there. mobile app development. and it's very exciting because twitter just took an office in downtown detroit and we're talking to other big names. it's not just us. there's a lot around our area. we're very excited. >> we watch other -- >> the midwest labor force, both cleveland and detroit where we're located, i know it sounds cliche but there's a midwest work ethic. there's no question about it. there's great people and they're skilled and universities put out great people. >> it's where you grow up. we agree with you. there is a midwest work ethic. >> the young people who are coming out of our great universities, michigan and michigan state, a lot are leaving and going to other cities. they don't go to suburbs other cities. they want a strong, vibrant urban core. that's what we're trying to help with. >> that's kind of cool. you look at just about every city has had